SYNNEX Corporation
Sep 21, 2006

SYNNEX Corporation Reports Third Quarter 2006 Results

FREMONT, Calif.--(BUSINESS WIRE)--Sept. 21, 2006--SYNNEX Corporation (NYSE:SNX), a global IT supply chain services company, today announced financial results for its fiscal third quarter ended August 31, 2006.

For the third quarter of fiscal 2006, revenues increased by 14.4% to $1.59 billion compared to $1.39 billion for the quarter ended August 31, 2005. Net income for the third quarter increased 52.5% to $13.8 million, or $0.43 per share, compared with $9.0 million, or $0.29 per share in the prior year quarter.

Adjusted earnings on a non-Generally Accepted Accounting Principles, or non-GAAP, basis for the third quarter of fiscal 2006 was $14.4 million, or $0.45 per share, which is net income adjusted to exclude share-based compensation expense of $0.6 million, net of tax, or $0.02 per share, compared with adjusted net income of $10.5 million, or $0.34 per share in the prior year quarter. Net income calculated in accordance with GAAP prior to fiscal 2006 did not include share-based compensation expense due to the adoption of SFAS 123R in the first quarter of fiscal 2006. The non-GAAP results for the third quarter of fiscal 2005 exclude, net of tax, $0.5 million in restructuring charges related to the Company's Canada operations and a $1.0 million non-operating loss on the Company's equity investment in MCJ Company, Ltd., related to the sale of the Company's former Japan operations.

"I am pleased by our performance in the third quarter, especially considering the fact that each of our operating regions contributed to our sales and profit growth," said Robert T. Huang, President and Chief Executive Officer. "While we still have much work to do, I am very encouraged by our current results, which we believe are reflective of the investments we have made in our business over the past year. Our ongoing goal is to build on these achievements."

Third Quarter Financial Highlights:

Fourth Quarter Fiscal 2006 Outlook:

The following statements are based on the Company's current expectations for the fourth quarter of fiscal 2006. The outlook amounts do not include any impact of special charges or restructuring amounts that could be incurred. These statements are forward-looking and actual results may differ materially.

The effect of share-based and other related non-cash compensation expense, which is included in the above figures, will approximate $0.03 per share in the fourth quarter of fiscal 2006.

The calculation of earnings per share for the fourth quarter of fiscal 2006 is based on an approximate diluted weighted average share count of 32.3 million.

Conference Call and Webcast

SYNNEX will be discussing its financial results and outlook on a conference call today at 2:00 p.m. (PDT). A webcast of the call will be available at http://ir.synnex.com. The conference call can be accessed by dialing 866-835-8907 in North America or 703-639-1414 outside North America. The confirmation code for the call is 964112. A replay of the conference call will be available at http://ir.synnex.com approximately two hours after the conference call has concluded and will be archived until October 5, 2006.

About SYNNEX

Founded in 1980, SYNNEX Corporation is a global IT supply chain services company offering a comprehensive range of services to original equipment manufacturers, software publishers and reseller customers worldwide. SYNNEX offers product distribution, related logistics services, demand generation marketing and contract assembly and works with the leading industry suppliers of IT systems, peripherals, system components, software and networking equipment. Additional information about SYNNEX may be found online at www.synnex.com.

Use of Non-GAAP Financial Information

To supplement the financial results presented in accordance with GAAP, SYNNEX uses the following non-GAAP financial measures: non-GAAP operating expenses, non-GAAP income from distribution continuing operations, non-GAAP income from contract assembly continuing operations, non-GAAP operating income, non-GAAP net income and non-GAAP diluted earnings per share. The Company presents such non-GAAP financial measures in reporting its financial results to provide investors with an additional tool to evaluate operating results. Because these non-GAAP measures are not calculated in accordance with GAAP, they may not necessarily be comparable to similarly titled measures employed by other companies. These non-GAAP financial measures should not be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with the Company's consolidated financial statements prepared in accordance with GAAP.

SYNNEX management uses each of the non-GAAP financial measures internally to understand, manage and evaluate the business. SYNNEX management believes it is useful for the Company and investors to review, as applicable, both GAAP information, which includes share-based compensation expense, Canadian restructuring charges, penalty on early debt payment, gain on sale of Japan operation, income from discontinued operations, and gain on Japan investment and the non-GAAP measures, which exclude this information, in order to assess the performance of the Company's continuing businesses and for planning and forecasting in future periods. Each of these non-GAAP measures is intended to provide investors with an understanding of the Company's operational results and trends that more readily enable investors to analyze SYNNEX' base financial and operating performance and to facilitate period-to-period comparisons and analysis of operational trends. The management of SYNNEX believes each of these non-GAAP financial measures is useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision-making.

The Company's non-GAAP financial measures reflect adjustments based on the following items:

Safe Harbor Statement

Statements in this press release regarding SYNNEX Corporation, which are not historical facts, are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements may be identified by terms such as believe, expect, may, will, provide, could and should and the negative of these terms or other similar expressions. These statements, including statements regarding our investment in our business, our goal to build on our third quarter achievements, our expectations of our revenues, net income and earnings per share for the fourth quarter of fiscal 2006, the effect of share-based compensation and other non-compensation expenses on our revenue, the anticipated benefits to our management, investors and analysts of our non-GAAP financial measures and the purpose of using non-GAAP financial measures, are subject to risks and uncertainties that could cause actual results to differ materially from those discussed in the forward-looking statements. These risks and uncertainties include, but are not limited to: general economic conditions and any weakness in IT spending; the loss or consolidation of one or more of our significant OEM suppliers or customers; market acceptance and product life of the products we assemble and distribute; competitive conditions in our industry and their impact on our margins; pricing, margin and other terms with our OEM suppliers; variations in our levels of excess inventory and doubtful accounts and changes in the terms of OEM supplier-sponsored programs; changes in our costs and operating expenses; changes in foreign currency exchange rates; risks associated with our international operations; uncertainties and variability in demand by our reseller and contract assembly customers; supply shortages or delays; any termination or reduction in our floor plan financing arrangements; credit exposure to our reseller customers, and negative trends in their businesses; any future incidents of theft; risks associated with our contract assembly business and other risks and uncertainties detailed in our Form 10-Q for the fiscal quarter ended May 31, 2006 and from time to time in our SEC filings. Statements included in this press release are based upon information known to SYNNEX Corporation as of the date of this release, and SYNNEX Corporation assumes no obligation to update information contained in this press release.

Copyright 2006 SYNNEX Corporation. All rights reserved. SYNNEX, the SYNNEX Logo, and all other SYNNEX company, product and services names and slogans are trademarks or registered trademarks of SYNNEX Corporation. SYNNEX and the SYNNEX Logo Reg. U.S. Pat. & Tm. Off. Other names and marks are the property of their respective owners.

                          SYNNEX Corporation
                     Consolidated Balance Sheets
                            (in thousands)
                             (unaudited)

                                              August 31,  November 30,
                                                 2006        2005
                                              ----------- ------------
Assets
Current assets:
 Cash and cash equivalents                    $   21,253  $    13,636
 Short-term investments                           10,740       27,985
 Accounts receivable, net                        382,872      342,322
 Receivable from vendors, net                     93,537       82,721
 Receivable from affiliates                          941        5,177
 Inventories                                     548,943      494,617
 Deferred income taxes                            15,434       15,445
 Current deferred assets                          13,937            -
 Other current assets                              8,845       10,908
                                              ----------- ------------
   Total current assets                        1,096,502      992,811

Property and equipment, net                       35,959       33,713
Goodwill and intangible assets, net               42,537       43,004
Deferred income taxes                              3,009        4,781
Long-term deferred assets                        149,376            -
Other assets                                      10,870        8,179
                                              ----------- ------------

   Total assets                               $1,338,253  $ 1,082,488
                                              =========== ============

Liabilities and Stockholders' Equity
Current liabilities:
 Borrowings under term loans and lines of
  credit                                      $   21,145  $    28,548
 Accounts payable                                492,370      448,339
 Payable to affiliates                            72,351       85,871
 Accrued liabilities                              70,544       68,619
 Other current liabilities                         6,304        6,085
 Current deferred liabilities                     29,705            -
 Income taxes payable                              3,164        4,820
                                              ----------- ------------
   Total current liabilities                     695,583      642,282

Long-term borrowings                              47,471        1,153
Long-term liabilities                              7,331          840
Long-term deferred liabilities                    98,687            -
Deferred income taxes                                990          988
                                              ----------- ------------
   Total liabilities                             850,062      645,263
                                              ----------- ------------

Minority interest in subsidiary                      241            -
                                              ----------- ------------

Stockholders' equity:
 Preferred stock                                       -            -
 Common stock                                         30           29
 Additional paid-in-capital                      170,626      159,551
 Accumulated other comprehensive income           16,571       12,701
 Retained earnings                               300,723      264,944
                                              ----------- ------------
   Total stockholders' equity                    487,950      437,225
                                              ----------- ------------

   Total liabilities and stockholders' equity $1,338,253  $ 1,082,488
                                              =========== ============


                          SYNNEX Corporation
                 Consolidated Statements of Operations
             (in thousands, except for per share amounts)
                              (unaudited)

                     Three Months Three Months Nine Months Nine Months
                        Ended        Ended        Ended       Ended
                      August 31,   August 31,   August 31,  August 31,
                        2006         2005         2006        2005
                     -------------------------------------------------

Revenue              $ 1,592,204  $ 1,391,590  $4,605,640  $4,047,681

Cost of revenue        1,519,486    1,332,612   4,399,564   3,876,013
                     -------------------------------------------------

Gross profit              72,718       58,978     206,076     171,668

Selling, general and
 administrative
 expenses                 49,205       39,249     137,920     117,120
                     -------------------------------------------------

Income from
 continuing
 operations before
 non-operating
 items, income taxes
 and minority
 interest                 23,513       19,729      68,156      54,548

Interest expense and
 finance charges,
 net                       2,743        3,777      12,935      11,108
Other (income)
 expense, net               (265)       1,155         (56)       (501)
                     -------------------------------------------------

Income from
 continuing
 operations before
 income taxes and
 minority interest        21,035       14,797      55,277      43,941

Provision for income
 taxes                     7,015        5,759      19,257      16,807
Minority interest in
 subsidiary                  241            -         241         (58)
                     -------------------------------------------------

Income from
 continuing
 operations               13,779        9,038      35,779      27,192

Income from
 discontinued
 operations, net of
 tax                           -            -           -         511

Gain on sale of
 discontinued
 operations, net of
 tax                           -            -           -      12,323
                     -------------------------------------------------

Net income           $    13,779  $     9,038  $   35,779  $   40,026
                     -------------------------------------------------

Diluted earnings per
 share from
 continuing
 operations          $      0.43  $      0.29  $     1.13  $     0.87
                     -------------------------------------------------

Diluted earnings per
 share               $      0.43  $      0.29  $     1.13  $     1.28
                     -------------------------------------------------

Diluted weighted
 average common
 shares outstanding       31,878       31,120      31,673      31,177
                     -------------------------------------------------


                          SYNNEX Corporation
                   GAAP to Non-GAAP Reconciliation
             (in thousands, except for per share amounts)
                             (unaudited)

The following tables reconcile GAAP to Non-GAAP financial information
----------------------------------------------------------------------

1. Operating Expenses
 Reconciliation:
                                  Three    Three     Nine      Nine
                                  Months   Months   Months    Months
                                  Ended    Ended     Ended     Ended
                                  August   August   August    August
                                    31,      31,      31,       31,
                                  2006     2005      2006      2005
                                 -------------------------------------

Operating expenses - GAAP        $49,205  $39,249  $137,920  $117,120
Canadian restructuring charges         -     (842)        -    (2,482)
Share-based compensation expense    (925)       -    (2,585)        -
                                 -------------------------------------
Operating expenses - non-GAAP    $48,280  $38,407  $135,335  $114,638
                                 =====================================


2. Income from Distribution
 Continuing Operations
 Reconciliation:
                                  Three    Three     Nine      Nine
                                  Months   Months   Months    Months
                                  Ended    Ended     Ended     Ended
                                  August   August   August    August
                                    31,      31,      31,       31,
                                  2006     2005      2006      2005
                                 -------------------------------------

Income from distribution
 continuing operations before
 non-operating items, income
 taxes and minority interest -
 GAAP                            $22,034  $17,046   $61,884   $44,491
Canadian restructuring charges         -      842         -     2,482
Share-based compensation expense     852        -     2,367         -
                                 -------------------------------------
Income from distribution
 continuing operations before
 non-operating items, income
 taxes and minority interest -
 non-GAAP                        $22,886  $17,888   $64,251   $46,973
                                 =====================================


3. Income from Contract Assembly
 Continuing Operations
 Reconciliation:
                                  Three    Three     Nine      Nine
                                  Months   Months   Months    Months
                                  Ended    Ended     Ended     Ended
                                  August   August   August    August
                                    31,      31,      31,       31,
                                  2006     2005      2006      2005
                                 -------------------------------------

Income from contract assembly
 continuing operations before
 non-operating items, income
 taxes and minority interest -
 GAAP                             $1,479   $2,683    $6,272   $10,057
Share-based compensation expense      73        -       218         -
                                 -------------------------------------
Income from contract assembly
 continuing operations before
 non-operating items, income
 taxes and minority interest -
 non-GAAP                         $1,552   $2,683    $6,490   $10,057
                                 =====================================


4. Operating Income
 Reconciliation:
                                  Three    Three     Nine      Nine
                                  Months   Months   Months    Months
                                  Ended    Ended     Ended     Ended
                                  August   August   August    August
                                    31,      31,      31,       31,
                                  2006     2005      2006      2005
                                 -------------------------------------

Income from continuing
 operations before non-operating
 items, income taxes and
 minority interest - GAAP        $23,513  $19,729   $68,156   $54,548
Canadian restructuring charges         -      842         -     2,482
Share-based compensation expense     925        -     2,585         -
                                 -------------------------------------
Income from continuing
 operations before non-operating
 items, income taxes and
 minority interest - non-GAAP    $24,438  $20,571   $70,741   $57,030
                                 =====================================


5. Net Income Reconciliation:
                                  Three    Three     Nine      Nine
                                  Months   Months   Months    Months
                                  Ended    Ended     Ended     Ended
                                  August   August   August    August
                                    31,      31,      31,       31,
                                  2006     2005      2006      2005
                                 -------------------------------------

Net income - GAAP                $13,779   $9,038   $35,779   $40,026
Share-based compensation
 expense, net of tax                 610        -     1,676         -
Canadian restructuring charges,
 net of tax                            -      513         -     1,605
Penalty on early debt payment,
 net of tax                            -        -         -       333
Gain on sale of Japan
 operations, net of tax                -        -         -   (12,323)
Loss on Japan investment, net of
 tax                                   -      995         -       438
                                 -------------------------------------
Net income - non-GAAP            $14,389  $10,546   $37,455   $30,079
                                 =====================================


6. Diluted Earnings Per Share
 Reconciliation:
                                  Three    Three     Nine      Nine
                                  Months   Months   Months    Months
                                  Ended    Ended     Ended     Ended
                                  August   August   August    August
                                    31,      31,      31,       31,
                                  2006     2005      2006      2005
                                 -------------------------------------

Diluted earnings per share -
 GAAP                              $0.43    $0.29     $1.13     $1.28
Share-based compensation
 expense, net of tax                0.02        -      0.05         -
Canadian restructuring charges,
 net of tax                            -     0.02         -      0.06
Penalty on early debt payment,
 net of tax                            -        -         -      0.01
Gain on sale of Japan
 operations, net of tax                -        -         -     (0.40)
Loss on Japan investment, net of
 tax                                   -     0.03         -      0.01
                                 -------------------------------------
Diluted earnings per share -
 non-GAAP                          $0.45    $0.34     $1.18     $0.96
                                 =====================================

CONTACT: SYNNEX Corporation
Laura Crowley, 510-668-3715
laurack@synnex.com

SOURCE: SYNNEX Corporation